About Rs 50,000 crore worth of fruit and vegetables go waste as only 2 per cent of the production is processed, industry chamber Assocham said on Sunday.
It said high incidence of taxation to the extent of over 18 per cent on branded processed agricultural products is largely responsible for stagnation of the processing industry in the country.
The chamber said quality processed products are by and large subjected to central sale tax of 2 per cent, 4 per cent local levies including entry tax and octroi, besides 12.5 per cent of the value added tax.
"However, unbranded products are mostly exempted or taxed at concessional rate of 4 per cent," chamber President Swati Piramal said.
She said a boost to the food-processing sector would generate rural employment and ensure fair prices for farmers.
The food-processing sector is known to have a high multiplier effect in terms of allied trades and industries.
Piramal said development of the processing industry would not only help reduce wastage of Rs 50,000 crore, it would lead to the growth of the organised industry.